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How Trustees manage legacy income is a key pillar of efficient charities.

With increasing regulation and recent criticisms of the sector, putting accountability at the heart of every organisation (large or small) is essential for long term self-preservation and potential damage limitation. Legacy administration itself is a particularly delicate area, and should be considered by all charities as a priority in terms of management. Trustees have ultimate responsibility for how the charity and its staff conduct themselves and can find themselves personally liable for any perceived or real misrunning of the organisation, whether aware of it or not. There are therefore three key areas that they need to be satisfied are in place for their protection:

  1. Tailored delegated authority from the Trustees authorising staff to perform particular functions
  2. Considered and internally agreed policies adhering to best practice
  3. Proactive risk management

Area 1 – Delegated Authority

In terms of legacy administration, unless there is official delegated authority from the Trustees, no staff should be carrying out specific tasks on their behalf.

This includes carrying out much of the day to day work of the legacy officer (things such as approving estate accounts, issuing receipts for funds, discharging executors from their liability, approving charity surveys etc). Nor should any staff be making decisions on behalf of the Trustees unless specifically authorized to do so and within defined parameters.

Any staff that carry out such tasks or decision making could find themselves personally liable for actions carried out in good faith, if any particular claim or issue was to come to light after the event.

In practical terms however, it is simply not possible to ask the Trustees to sign every letter sent out and look at all the work the legacy officer is doing: it is after all why charities employ staff, in order to run the charity for the Trustees.

It is therefore very much in everyone’s interest to ensure that there is a clear understanding of what is and isn’t permitted by having a detailed scheme of delegated authority in place.

Area 2 – Policies and guidelines

It is considered best practice to document internal policies and procedures for legacy officers to follow in their day to day work. This allows for consistency of practice, within agreed guidelines, and also safeguards in the event that a legacy officer leaves or an external consultant is engaged for a period.

Areas to consider for your policies and guidelines are:

  • When to write to executors following up conditional gifts
  • How far to pursue lay executors for small unpaid gifts
  • The internal ex-gratia and enlightened self interest payment procedures
  • How to manage any difficult press or PR issues
  • What issues would be classed as having significant risk in terms of legacy administration and whether they would be entered on to the central register
  • How supporter information should be recorded on your legacy database (First Class)
  • The process for instructing legal advisors
  • How any longstanding indemnities will be recorded and shown in the management accounts
  • Policy for accruing legacy income according to SORP guidelines

There may well be other issues which crop up which would also benefit from a clear policy being decided as and when appropriate.

Area 3 – Risk Management

There are several areas of risk that need managing proactively, including:

  • managing income, including handling cheques and recording payments
  • receipting gifts and discharging executors responsibility
  • estimating future legacy income and managing pipeline expectations
  • granting indemnities
  • public relations

An important part of the legacy officers role is to help manage Trustee’s risk, who can be held personally liable for any issues arising.

Therefore there should be clear procedures in place and legacy officers should be suitably skilled and experienced in order to manage and reduce risk where possible.

Sharon Wheeler

Want to know more?

For more information about the ways we could support your team please contact Sharon Wheeler